Big three auto companies will beg for bailout

November 18, 2008 12:33:16 AM PST
Congress is debating a bailout for the auto industry this week and it promises to be a tough sell. So General Motors is now turning to the internet to drum up support.

The heads of the big three automakers head to Capitol Hill on Tuesday to plead for financial help. Senate Democrats have come up with a plan that would give General Motors, Chrysler and Ford $25 billion in loans from the $700 billion Wall Street bailout.

"If we move forward, we can protect American jobs, help American families, and prevent our economy from falling further into recession," said Senator Harry Reid, the Senate Majority Leader.

Regardless, many lawmakers and the Bush Administration aren't sold. Polls show there is little support from the American people as well.

"We do have to do some tough things to get through today's challenging environment," said Rick Wagoner, GM CEO.

General Motors is now doing what it can to gain the public's support. The company has posted a video on YouTube. It says three million U.S. jobs would be lost if the big three automakers fold, and that the U.S. Government would lose more than $150 billion in lost taxes.

Peninsula Congresswoman Jackie Speier still isn't convinced. Like many, she believes the automakers are running on a failed business model.

"You can't have this industry allowed to continue to operate the way it has. It's not working, it hasn't worked for decades," said Representative Jackie Speier (D) of California.

There are suggestions the big three automakers, should restructure under Chapter 11 Bankruptcy, but G.M. says that would scare away customers who would fear warranties would be worthless.

U.C. Berkeley professor Harley Shaiken believes a government bailout is the best option. He says the big three are making big gains in fuel-efficient technology.

"Detroit has seen the light and is in the midst of a sweeping restructuring. The problem is the collapse of the rest of the economy means they can't get dollars to finance this," said Shaiken.

Under the Senate's plan, executive compensation would be capped and jobless benefits would be extended. The Senate could vote on this as early as Thursday.


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